While world powers continue to debate climate change and who should take more responsibility for saving the world, an ambitious green energy program in Bangladesh is banking on the poor to find a sustainable solution.

Nobel peace laureate Muhammad Yunus has successfully extended his microfinance magic to power rural communities with renewable energy that creates more jobs and income for the poor and reduces greenhouse gases.

Pioneered by Grameen Shakti (meaning Rural Power) – a subsidiary of Professor Yunus’s now fabled Grameen Bank – the idea looks simple. Develop an affordable solar home system and offer it to the rural population through a soft credit facility. Add to that a low cost bio-gas solution for cooking needs. And ask each customer to plant five trees in their backyard. The outcome is surplus carbon credits that potentially can be used to offset emissions in the developed world – potential already being recognised by the World Bank, which has offered Grameen Shakti a carbon offsetting deal for its solar panel projects.

The innovative approach has won Grameen Shakti several major renewable energy awards including the Right Livelihood Award in 2007, widely known as the Alternative Nobel Prize.

Grameen history

Started in 1996, the programme has come as a god-send in a country of 145 million, where 80% people live in poverty and 70% have no access to grid electricity. They have to rely on highly polluting Kerosene oil and diesel generators for lighting and depend on bio-mass, wood, cow dung and crop residue for cooking, which not only create indoor pollution but, through misuse of resources, lead to deforestation, soil erosion and floods.

The solar home system involves a photovoltaic panel that converts sunlight into electricity, a battery that stores the electricity, a charge controller that regulates charging and discharging of battery, a fluorescent tube lights with special electronic ballast, installation kits and connecting devices.

The bio-gas plant uses poultry waste and cow dung to produce gas for cooking and lighting or electricity for power generation. Slurry from the plant can be used for developing organic fertilisers.

From a humble beginning of 228 homes in 1997, Grameen Shakti now powers over 135,000 homes, currently adding 5,000 homes every month using photovoltaic technology. Three million trees have been planted under the plantation scheme.

Dipal Chandra Barua, the managing director of Grameen Shakti – a not-for-profit company – and a close associate of Yunus, told ClimateChangeCorp.com: “Our target is to have one million solar home systems and one million bio-gas installations by 2015. We plan to achieve this through promoting local entrepreneurs who will market, install, and carry-out repair and maintenance activities at the local level on behalf of Grameen Shakti.”

He also plans to increase the number of offices from the current 385 to 1,000 in five years and open 100 Grameen Technology Centres, in addition to existing 20, to scale up production to meet increased demand.

The parent company Grameen Bank provides low-interest finance and, for a solar home system that has a life of 25 years, the customer can chose to pay 10% to 25% upfront and the rest in 24 to 42 monthly installments at a flat service charge of 4% to 6%. The total cost of a 50-watt solar home system –the most popular size – is $400. A 50-watts solar system can power four to six low-energy lamps, radio, TV and mobile phone charging. Depending on their needs, consumers can chose a capacity ranging from 10 watts to 75 watts.

A bio-gas plant can cost from $215 – good for an individual household – to $1,400, enough for supporting a cluster of homes. They range from 1.6m3 to 70m3 of bio-gas production.

An in-house research laboratory helped Grameen Shakti reduce the product cost, adapt the technology and develop a range of accessories, such as a mobile phone battery charger. Grameen now manufactures most accessories in its own workshops or workshops owned by female engineers, trained by Grameen.

The Grameen Shakti CEO told ClimateChangeCorp the company imports its solar panels and some of its batteries, as no solar panel manufacturers currently operate in Bangladesh. However, Grameen has plans to set up a joint venture solar panel manufacturing facility in Bangladesh and is talking to potential partners.


Poverty Reduction

Grameen Shakti is using the green energy revolution to attack poverty by taking an integrated approach. It is training local youth – 1,000 so far – who are then employed as technicians for the installation, operation and maintenance of solar systems. Female engineers trained by Grameen are subcontracted to produce solar system components and run repair shops.

The availability of light is enabling rural artisans and traders to stretch working hours, creating extra income. The solar technology has open up new businesses opportunities in villages such as mobile phone charging shops, TV Halls, computer training centers and pay phone services, according to Grameen Shakti’s CEO, Barua.

Grameen Shakti is also conducting research to use wind energy in the coastal areas. In the pilot phase, it has installed four hybrid power stations (using wind turbine and diesel generators), which power lights, fan, water pump etc in four cyclone shelters.

Mitigating climate change?

Aminul Islam, assistant country director of the UN Development Programme in Bangladesh and an expert on energy, climate change and sustainable development says: “Taking renewable energy to rural masses can definitely contribute to climate change mitigation as villagers shift from highly polluting energy sources to more sustainable ones.”

Abu M Kamal Uddin, a program manager with the Climate Change Cell of the environment ministry says: “Bangladesh is not yet industrialised and demand for energy will only grow. Generating clean energy as much as possible is therefore a good contribution to climate change mitigation.”

Sustainable development experts, however, say that in spite of commendable efforts by Grameen Shakti, solar power is still not affordable for the majority of the poor in Bangladesh. NGOs say that the current, complex structure of the Clean Development Mechanism (CDM) makes it difficult to seek funding for smaller initiatives. “A rethinking is needed to make the CDM easily accessible for smaller initiatives,” Islam says.

Change in the air

A deal between the World Bank and Grameen Shakti, though, is likely to bring CDM to the grass-roots by bundling smaller projects. Barua reveals that the World Bank signed an emissions reduction purchase agreement with Grameen Shakti in December last year. “Under the agreement, Grameen Shakti can claim €9 per tonne of carbon reduction for one million solar home systems to be installed by 2015,” he says.

Barua added that the field verification has been completed, the Designated National Authority has approved the application and the World Bank is taking the deal to the CDM board for final approval.

One 50-watt solar home system reduces half a tonne of carbon per year. Under the agreement each 50-watt unit would only earn €4.5 annually, but according to Barua, revenue from the carbon credits will help reduce the unit cost and enable Grameen Shakti to extend the repayment period from the current three years to five years, making the solar home system more accessible for lower income groups.

“The CDM revenue will also assist Grameen Shakti to cover the risks involved in providing micro-financing to the end users and further accelerate the spread of solar home systems,” a World Bank statement said.

Barua says: “The agreement also recognises Grameen Shakti as the lead organisation enabling it to extend the benefit to other NGOs and bundle their projects as well.”

“Once a million solar home systems are implemented by 2015, the project will reduce an estimated 48,000 tonnes of CO₂ emission a year by replacing kerosene and diesel generators,” says a World Bank report.

Barua says, “Bangladesh is the worst victim of climate change with a potential danger of one million people being displaced. Yet, we can be a role model and play a positive role by creating clean energy for the masses, preventing deforestation and reducing reliance on fossil fuel and oil.

“Empowering the poor with clean energy and enabling them to fully harness their potential will better equip them to cope up with climate change.”

The Grameen bank deal comes as the World Bank launches its new strategy, starting from March 2008, to act as a guarantor for carbon credits produced in the developing world.